Twenty five Nordic law firms have now signed up to use the legal AI tech of Luminance, the company has said, in an unexpected sign of how a relatively tight-knit legal market can go all-in with legal AI systems.

The benchmark news comes with the announcement of the legal AI company’s 25th law firm client win in the region: Arntzen de Besche Advokatfirma (AdeB) in Norway, which has 56 partners – a relatively medium-size firm compared to the global giants often associated with using AI tools in the US and UK.

Most of the firms in the Nordics that are using Luminance are doing so for M&A due diligence and seem to like the way it can work with the lawyers to initially and very quickly sort out complex mixes of documents into their constituent types, only needing a relatively small machine learning input to do so. This Luminance says is down to their ‘optical’ approach to how text appears and the models that can be quickly built from this to identify documents and their contents. (Firms also like what is understood to be a pricing model that permits less upfront costs….)

But, let’s hear from a Nordic firm. Here’s how Geir Mortensen, Business Development Manager at AdeB, explained why the firm thinks this is the right tool for them: ‘We have been looking for an AI solution to enhance the work of our legal teams for some time, and Luminance answers our need for an easy-to-use contract review tool.’

‘During the pilot, the technology seamlessly learnt a large number of new legal concepts in both English and Norwegian, allowing our legal team to build up a custom clause bank within hours. Luminance’s in-built workflow tools also allow easy allocation and monitoring of tasks, which will prove invaluable for the 130 lawyers across our firm,’ he added.

OK, fair enough. But, why have the Nordics gone so crazy for AI? Artificial Lawyer spoke to a couple of people who should know. First, a legal tech company founder in the region who noted that most local lawyers didn’t see a huge pressure on pricing from clients and they didn’t think this was the main factor driving adoption of AI and automation there.

This is perhaps an effect of having a relatively small range of top tier law firms to choose from. AL remembers speaking to one managing partner of a Swedish law firm some time ago and asked them about how much panels were used there to help clients get more value out of their law firms.

The managing partner replied that as there are generally under ten leading M&A firms in each of the Nordic markets (some would say less than five…) having a panel is a bit pointless, as any large company would almost certainly consider the same list of firms if you had a panel or not. I.e. the Nordics are a stable, well understood market, not driven by surges of new competitors hell-bent on shaking things up, or prone to lots of change. And that can mean less pricing pressure.

Also, the deal volume in the Nordics is not at the same scale as in the US and UK. E.g. UK M&A deal value for H1 2018 was US$397.26 Billion, according to Thomson Reuters. In comparison, the whole of the Nordics had a total of US$66.57 Billion, for the same period, or about 16% of the UK total. And the Nordics are primarily: Denmark, Finland, Iceland, Norway and Sweden.

I.e. there does not seem to be the massive macro-forces needed to really drive clients to push for huge leaps in efficiency, as one might see in the M&A due diligence ‘factories’ one finds in New York and London, where clients see so much deal activity they readily demand extra efficiency where any process work is involved.

‘Legal AI became mainstream [here] quickly after a few pioneering firms started exploring it a few years ago,’ said Svärd.

‘Firms probably like to be perceived as modern and innovative. In fact, a recent survey showed that firms that are perceived as modern are doing better than competitors. AI is ‘in’ at the moment, and many lawyers I’ve talked to have said they want to be onboard – if for nothing else in order to learn. Also, let’s not forget that many of their clients are tech companies,’ he added.

So, from Svärd’s view this isn’t so much economically driven as a practical reality of meeting the ‘new normal’, and that normal includes using AI tools for review. I.e. the clients will be a bit upset if you’re not doing so.

It’s also worth mentioning that many Nordic firms are not that large. They need their highly trained junior M&A lawyers to focus on higher value work. AI helps them cut through the meat of a deal just that little bit quicker, and that helps the firm.

And perhaps the final point is also a socio-economic one. In a relatively smaller, highly connected market, where many of the key stakeholders know each other, the establishment of norms can happen much more quickly.

Ironically, even though the City of London is one of the most densely packed locations of commercial lawyers on the planet, the legal market here still often operates in silos, with a whole range of ‘sub-markets’ operating within the larger market. And these parallel markets don’t always communicate with each other, perhaps as a function of specialisation and different types of client.

One of the paradoxes of large markets is that they encourage bifurcation and specialisation, which in turn can reduce links and communication between the constituents.

Well, there you go. Maybe none of the above is the reason for this. Maybe Luminance is just really good at selling their tech to Nordic customers? Maybe there is something about their UI that people with a Scandic-Design view of the world appreciate? Maybe it’s a combination of all of the above.

The fact remains: a relatively small market has gone all-in on legal AI, and that’s great to see. And this has all happened in a very short space of time, after all, Luminance is only just over two years old.